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DOWJONES

Price of Natural Gas Hits Boiling Point, Soars Past Cost of Oil

Monday, December 18, 2000 12:58 AM ET

DALLAS -- For the past year, industrial companies have complained loud and long about rising oil prices, The Wall Street Journal reported Monday.

But like the old joke about curing a headache by dropping a brick on your foot, some companies that have been pinched by high oil prices are now facing a far more painful reality: skyrocketing natural-gas prices.

Indeed, oil prices have eased in recent weeks, with prices falling to about $28 a barrel from about $35. On Friday, spot oil prices were quoted at about $28.88 a barrel.

Prices for natural gas, which is used to heat 61 million households and is a major source of energy for makers of chemicals, plastics and electricity, have jumped more than fourfold in the past year and are approaching $10 a million BTU. In California, prices have shot up to astronomical levels, with spot prices as high as $17 or $19 a million BTU. That's the equivalent of paying $120 a barrel of oil.

For consumers, the price boosts could translate into winter heating bills that jump 50% or more. Consumers will notice the impact of high natural-gas prices from the hardware store to the grocery store as natural-gas costs jack up the price of plastic products and packaging materials.

To some economists, the potential shock from escalating natural-gas prices could be bigger than anything the economy has seen in decades. During past energy shocks, says economist David Resler at Nomura Securities International in New York, "oil prices rose and most other energy prices remained low." But now, he says, consumers are facing a market where oil prices are high and natural-gas prices are even higher. In addition, he says, the rise in natural-gas prices "will have a much bigger impact on households than the rise in oil prices, because six times as many households use natural gas as use oil," Mr. Resler says.

Meantime, the price explosion has exposed just how vulnerable American manufacturers are to cheaper imports. "Eight dollar natural gas has turned U.S. petrochemical producers into the most expensive producers in the world," observes Gary Adams, president of consulting group Chemical Market Associates Inc.

-- (in@energy.news), December 19, 2000

Answers

So much for that "soft landing".

-- no one here (-@-.-), December 19, 2000.

http://www.agriculture.com/default.sph/AgNews.class?FNC=sideBarMore__A Newsindex_html___44560

Fertilizer prices shoot upwards

By Larry Reichenberger

Crops and Machinery Editor

Successful Farming

Fertilizer prices are increasing dramatically across the Midwest. Dealers in Kansas will raise the price of NH3 by $55.00 per ton on Monday to a price of $330.00. Farmers rushing to book the product at existing prices were generally unable to find adequate supplies. The increase marks the largest ever one-time step in NH3 prices.

The price of other nitrogen fertilizer products is also increasing rapidly. Urea (46-0-0) will shoot to $235.00 per ton, up $14.25. Liquid nitrogen (28-0-0) will increase $25.00 per ton to $175.00 and the price of starter fertilizer (10-34-0) will increase from $210.00 per ton to $235.00.

The rapid increases are the result of a similar increase in the price of natural gas, the primary feedstock in NH3 production. Gas prices have quadrupled over prices one year ago and many fertilizer manufacturers are shutting down production as a result. On Thursday, Agrium, Canada's second-largest producer, announced it was cutting output at five of its North American plants resulting in a 17% decline.

Also, on Monday, US manufacturer Terra Industries announced it was idling production at a plant in Oklahoma along with shut downs announced earlier in Arkansas and Texas. And, Farmland Industries has told its dealers it will not reopen its facility in Lawrence, Kansas with crippling gas prices. Representatives from Farmland told dealers that, at current gas prices, the feedstock alone to manufacturer a ton of NH3 would cost $350. 12/15/2000 01:24 p.m.CDT

-- (in@energy.news), December 19, 2000.

High diesel prices hurt independent truckers

By Associated Press, 12/19/2000 13:23

PROVIDENCE, R.I. (AP) Eighteen months ago a gallon of diesel in New England cost about $1.05. Lately, the price has risen to about $1.76.

Todd Spencer, of the Owner-Operator Independent Drivers Association, says independent truck drivers who own rigs have been hardest hit.

''We never recovered from the price spike in the spring and now they are talking about prices going up as much as 30 percent or more, said Spencer, executive vice president of the 47,000-member trade group.

''That would be devastating to the small-business drivers. It would be especially devastating in New England. Drivers might not decide to go into the area,'' he told The Providence Journal.

As of Monday, the average price for diesel in New England was 18 cents higher than the national average of $1.58 a gallon, according to the U.S. Energy Information Administration.

Many carriers have been passing on the additional fuel costs. Federal Express, for example, has increased rates more than 5 percent.

Major truck lines have raised their rates as much as 6 percent to cover the additional costs, but independent truckers say they can't.

''Our folks simply don't have the leverage of the larger companies,'' Spencer said.

Drivers can't just work harder to make up for the added expense since there are federal limits on how many hours they can work in a day and a week.

Faced with diminishing returns, more and more small companies and independent operators have simply parked their trucks and stopped driving.

John Anderson, general manager of Anderson Motors in East Providence, which sells Volvo trucks, said the number of drivers who have parked their rigs and stopped driving has increased significantly this year and he blames higher diesel prices.

''Some of these guys simply hand in their keys,'' Anderson said.

Rhonda Simpson, who drives an 18-wheeler, is struggling to stay afloat.

''I'm paying expenses, but it is paycheck to paycheck,'' Simpson said.

Local dealers said that sales of new trucks have also been affected, with the foreclosure rate on trucks rising significantly in the last year.

''The minute I can't make payments any more then I lose my truck,'' said William Carroll, a West Warwick independent operator. ''Once that happens, I lose my credit. I might even lose my home. And to find another job after I have done this for 20 years, well, that's difficult.''

The truckers have been trying to bring public attention and relief to their situation, including demonstrations at the Rhode Island Statehouse last winter.

Gov. Lincoln Almond agreed to move back the date truck drivers must register their rigs as well as establishing a low-income loan program.

State officials say that 39 drivers received loans totaling $195,000.

The state Economic Development Corporation has agreed to run a loan program similar to last year's for drivers and may push back the registration of trucks, a process that can cost more than $2,000.

http://www.boston.com/dailynews/354/region/High_diesel_prices_hurt_ind epe:.shtml

-- Cave Man (caves@are.us), December 19, 2000.